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bond are formal certificates issued by the companies or government agencies acknowledging the indebtedness to the investors they are
since the operations in the money market are dominated by institutional players the retail investors participation in the market seems to
corporates generally raise funds from the inter corporate deposit icd markets these instruments generally carry interest rates higher
short-term funds having a maturity of 15 days and over are categorized as term money banks access this term money route to bring greater
these funds represent borrowings made for a period of one day to upto a fortnight however the mechanism adopted to lend funds to the call
the banking sector has a vital and active role in the money market the transactions taking place in these securities are large in size
the rbi on behalf of the government issues all t-bills and government dated securities being risk-free securities they set the benchmark
t-bills are issued to enable the government to tide over short-term liquidity requirements with maturities varying from a fortnight to a
just as any other financial market money market also involves transfer of funds in exchange for financial assets because of the nature of
generally an interest rate or an interest rate index is used as a reference rate for however through financial engineering issuers have
extendible reset bonds are floaters in which the issuer is required to reset the coupon rate so that the issue will trade at a
stepped spread floaters have a provision to change the quoted margin at certain intervals over a floaters life the quoted margin could
floaters that can be classified under this head are1 stepped spread floaters2 extendible reset
the coupon rate of these types of bonds is adjusted periodically at a fixed margin over a reference rate it can be adjusted southward
in dual indexed floaters the coupon rate is a fixed rate plus the difference between two reference rates purchasers of these securities
normally floater coupon rate moves in the same direction as the reference rate that is with an increase in the reference rate the floater
a floater where the coupon rate is computed as a fraction of the reference rate plus a quoted margin are known as a de-leveraged floater
let us look into few floaters that have constant quoted margin1 de-leveraged floaters2 inverse floaters3 dual-indexed
floating rate securities can be broadly divided into following two partsfloating-rate securities that have constant quoted
these were first issued during a period of extreme interest rate volatility in the late 1970s floating-rate bonds which are also known
these are bonds which are offered within the euro market and several other markets simultaneously unlike eurobonds global bonds can be
the term eurobonds refers to bonds issued and sold outside the home country of the currency for example a dollar denominated bond issued
they are issued in the local market by a foreign borrower are usually denominated in the local currency for example yankee
they are issued in the local market by a domestic borrower and are usually denominated in the local currency for example us companies